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The Kogi-Dangote face-off over Obajana

By Editorial Board
31 October 2022   |   3:55 am
The resort to court for determination of the dispute between the Kogi State Government and Dangote Industries Limited over ownership of Obajana Cement Plant in the state is perhaps the best option for the two parties.

Sealed Dangote Obajana plant

The resort to court for determination of the dispute between the Kogi State Government and Dangote Industries Limited over ownership of Obajana Cement Plant in the state is perhaps the best option for the two parties. If that option had been taken first before the forced closure and later re-opening of the factory, employees of the company and the people of Obajana in particular would have been saved the anxiety generated by the dispute; and the state government could have also avoided the embarrassment and trail of criticisms that greeted its action.

Certainly the turn of events in the faceoff is alien to civilised settings. Without doubt, business concerns have mandatory obligations to their host communities, as much as it is the latter’s responsibility to protect such investments in their domains. Where there are conflicts of interest, parties should either seek amicable resolution or go the whole hog of litigation without throwing away the baby with the bath water. That the disagreement over ownership and royalties from the cement factory, between Kogi government and Dangote Industries detoured into brigandage is an ill-wind that blows nobody good.

The Federal Government, some days ago, had to order the reopening of the Obajana Cement Factory in Kogi after the huge factory was violently shut down over ownership tussle and alleged non-remittance of taxes to the state government. It is one face-off that has dragged on for years and got messy when an armed vigilante squad, allegedly at the behest of the state governor, invaded the factory to enforce a shutdown order. Dangote Cement said at least seven staff of the plant were shot and several others injured as over 500 armed members of the state’s security outfit, the Vigilantes, stormed the cement factory in the early hours of the fateful day.

The cement factory apparently once belonged to Kogi State Government, but it does seem that the ownership structure changed in circumstances that are yet unclear or uncompleted. Kogi State has over the years been in partnership in the development, expansion and commercialisation of land and mineral rights. Lately, it has engaged Dangote Cement over alleged non-payment of tax to the state Revenue Service and controversy surrounding the state government ownership share in the company. These led to the State House of Assembly’s investigation and order of closure for allegedly operating “illegally” with no valid acquisition evidence of the company. In contention, according to the State government, is the proof of legally acquiring any part or the whole shares of the factory, to which Dangote Cement Plc claims 100 per cent ownership.

On its part, Dangote Industries Limited (DIL) has insisted that its acquisition of the Obajana Cement Plc in 2002 followed due process, contrary to claims by the Kogi State government. The conglomerate asserted that Kogi State government has no equity interest in Obajana Cement Plc. It also stated that the company as a responsible corporate organisation has been paying relevant state taxes, levies and charges to the Kogi State government since 2007 when production commenced in the acquired cement plant. The company reiterated that “Obajana Cement plant is 100 per cent owned by Dangote Cement Plc.”

In the light of the factory’s importance, both to Kogi State and Dangote conglomerate, the conflict of interest should be handled with caution. The cement plant is supposed to be of mutual benefit to the parties. The trillion-naira worth of factory is the biggest of such plants in Nigeria, and one of the largest cement factories in sub-Sahara Africa, with 16.25 metric tonnes capacity across five lines. It is one of the most critical components of economic activities in the country, occupying a strategic location surrounded by limestone deposits – which is about 40 per cent of cement ingredients. The reserve is estimated to be worth 647 million tonnes, to last 45 years of consistent usage. The factory employs between 6,000 and 10,000 of all categories of workers – a large fraction of which are Kogi indigenes. Cumulatively, the plant is a model of industrialisation and investments that the state governments should be seen promoting nationwide, at least to rescue the country from the high unemployment albatross.

Granted that there are high suspicions of illegality and collusion in the build up to the cash-cow that the factory has become, this should not be at the expense of civil resolution of the conflict. The invasion of the plant and alleged attack on workers, some of whom are Kogi indigenes and fellow Nigerians, is crude and unacceptable. The action amounts to a breach of the rule of law and order, on which premise the Manufacturers Association of Nigeria (MAN) and the Chambers of Commerce and Industry have decried the shutdown of the factory, describing it as a mirror-image of the poor handling of investment protection issues in our country.

Indeed, the world is a small village and the news having gone global, may potentially showcase Nigeria more as a red-flag for potential investors. If aggrieved state-actors could ditch arbitration and take laws into their hands against investments supposedly under their protection, then why should Foreign Direct Investment (FDI) flow into Nigeria? Despite state executives junketing round the world in search of investors, FDI inflow continues to drop year-on-year. For instance, Nigeria lately advertised globally in search of technical partners for its new national carrier. Only an African airline showed interest in three months! It is evident that incidents like the Kogi-Dangote brouhaha, and similar others stifling the business environment discourage the investors. The world will not take Nigeria seriously, having seen through her cavalier disposition to good judgment, infidelity to agreements and side-tracking of due process.

Past efforts at arbitration notwithstanding, there should be concerted interest to put an end to this industrial face-off in Kogi. It is reassuring that well-meaning individuals are using their good offices to bring both the Kogi governor and chairman of Dangote to talking terms. Next is for both parties to genuinely submit to arbitration – by mechanisms of Alternative Dispute Resolution (ADR) or judicial process, to prove their positions towards a settlement. Fortunately, the court process has been initiated; parties should submit themselves accordingly and consciously avoid prolonging the matter through technicalities. It should be an opportunity to fully understand what went down in the acquisition process, who the actors were and the interests they represent. Germane questions are: how did a state-owned Obajana Cement factory supposedly die and get resurrected as Dangote Cement factory? Who are the indigenes that negotiated the privatisation without evidence of transfer of ownership? Kogi citizens and Nigerians at large deserve to know how a state-owned and financed factory started yielding zero in taxes to the state coffers.

It is instructive that the Federal Government has directed the reopening of the factory. But beyond executive fiat, the apex government should be aware that such conflicts pose serious socio-political and economic implications for the entire country. A more proactive Federal Government with genuine knack for ease of doing business and deepening private sector investments would stem the tide before it slams the banks. Not much of that was seen in this matter.